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Carmi Moly Copper Project, BC

Ownership:

  • 49% St. Elias Mines
  • 51% Hi Ho Silver Resources Inc.                                                                                

Property Option Agreement:

  • Hi Ho Silver has earned an initial 51% of the Carmi property

Mineralization:

  • Mo porphyry mineralization 
  • 3 Mineralized zones

Technical Reports (43-101):

  • Sedar.com – filed by Hi Ho Silver Resources Inc. on Sept 25, 2008.  Report titled “Technical Report and Resource Estimate on the Carmi Molybdenum Deposit”.  P&E Mining Consultants, Brampton ON

The Property:

The Carmi Molybdenum Property is situated in the Okanagan Highlands of south central British Columbia, approximately 45 kilometres south-southeast of Kelowna. Access is by paved Provincial Highway No. 33 to the nearby settlement of Carmi. Numerous overgrown logging roads and drill trails provide convenient access throughout the property and to the principal mineralized showings, the E Zone and the Lake Zone.

The property is located within the prolific Beaverdell Mining Camp of south-central B.C.  The property covers at least 3 zones of molybdenum mineralization. 
Molybdenum mineralization was discovered in 1960 by Kennco Explorations (Western) Limited during the course of geochemical exploration in the Beaverdell area. Between 1961 and 1990 a number of exploration companies conducted major programs in efforts to define the grade and size of the deposit. Among those companies were International Minerals and Chemicals Limited, Husky Oil Limited, Granby Mining Corporation, Craigmont Mines Limited, Union Oil Company of Canada Limited, Vestor Explorations Ltd., Dynamic Oil Limited and Placer Dome Inc. Work included geological mapping, prospecting, geochemical surveys, geophysical surveys, dozer trenching, and drilling. To date, 221 drill holes have been completed on the property.

This work resulted in the definition and publication of potential open pit “drill indicated” molybdenum resource calculated for each mineralized zone. The E Zone was estimated to contain 17 million tonnes (18.7 million tons) grading 0.063% molybdenum (0.105% MoS2) and the Lake Zone, about 750 metres west of the E Zone, was estimated to contain 3.7 million tonnes (4.1 million tons) grading 0.066% molybdenum (0.110% MoS2). A higher grade body of molybdenite mineralization was intersected in drill intercepts of molybdenite mineralized breccias occurring as sheets or panels beneath the Lake Zone. This potential underground mining target was estimated to contain 4.5 million tonnes (5 million tons) grading approximately 0.2% molybdenum (0.33% MoS2) (Assessment Report 16102; Leary, 1987).

The property was uneconomic during the 1990’s due to the depressed price of molybdenum and the mineral claims subsequently were allowed to lapse. With the significant rise in the price of molybdenum, from the US $3.00 per pound range in the 1970’s to in excess of US $20.00 per pound in the 2000’s

The claims were re-staked in 2001 and a 100% interest was subsequently purchased by St. Elias Mines Ltd. The Carmi Molybdenum Property was subsequently optioned to Hi Ho Silver Inc. Details of the option agreement are stated below under “the deal” section.

During the period September 2006 through October 2008, an exploration program consisting of grid establishment, GPS surveying, 3-D induced polarization (IP) surveying and diamond drilling was conducted on the property. A total of 5,605 metres of NQ diamond drilling in 32 holes were completed during this period. All exploration work was conducted by Meridian Mapping Ltd., on behalf of Hi Ho Silver Resources Inc. This work culminated with the completion of a NI43-101 compliant Mineral Resource Estimate, by P&E Mining Consultants Inc., (“P&E”) of Brampton, Ontario in September 2008.

P&E 2008 Open Pit Resource Estimate @ 0.026% Mo Cut-off Grade

Classification Tonnes Mo (%) Mo (million lbs.)
Indicated 12,906,000 0.058 16.5
Inferred 27,385,000 0.056 33.5

 

(1) Mineral resources which are not mineral reserves do not have demonstrated economic viability. The estimate of mineral resources may be materially affected by environmental, permitting, legal, title, taxation, socio-political, marketing, or other relevant issues.

(2) The quantity and grade of reported inferred resources in this estimation are conceptual in nature and there has been insufficient exploration to define these inferred resources as an indicated or measured mineral resource and it is uncertain if further exploration will result in upgrading them to an indicated or measured mineral resource category.

Recommendations:

It was recommended by Meridian Mapping Ltd. And P& E Mining Consultants inc. to carry out in-fill diamond drilling to upgrade inferred resources to the indicated category.  In addition a program of step-out diamond drilling was recommended to expand the known resources.

Terms of Property Option Agreement:

Hi Ho Silver Resources Inc. (“Hi Ho”) earned an initial 51% interest in the Kettle River (Carmi) Moly Property from St. Elias by paying $75,000, issuing 500,000 common shares of Hi Ho to St. Elias and incurring exploration expenditures of $2,000,000 on the Property.  St. Elias recently agreed to sell the remaining 49% interest in the Property to Hi Ho in consideration of $750,000 and 3,500,000 common shares of Hi Ho.  St. Elias retains a 1.5% net smelter return royalty (“NSR”) from all proceeds received from commercial production.  In addition, St. Elias agreed to grant Hi Ho an option to purchase 1,750,000 of these shares at $1.00 per share and Hi Ho agreed that in the event it sells the Property (or an interest in the Property) in the future, St. Elias will receive a portion of the proceeds which Hi Ho realizes from the sale of the Property or an interest therein.

In July 2008, St. Elias entered into a Letter Agreement with Hi Ho Silver Resources Inc. (“Hi Ho”), whereby St. Elias granted the exclusive right and option to Hi Ho to acquire the remaining 49% interest in and to the property, upon the following terms:

(a)   St. Elias shall retain a 1.5% net smelter return royalty in the property;

(b)   Hi Ho shall pay the sum of $750,000 cash to St. Elias;

(c)   Hi Ho shall issue an additional 3,500,000 shares of Hi Ho to St. Elias;

(d)   in the event that Hi Ho sells an interest or grants an option to acquire an interest in the Property to a third party, St. Elias shall receive a portion of the proceeds (cash and/or shares) realized from such sale of an interest or grant of an option payable to St. Elias either as a shareholder dividend or a direct payment. The amount St. Elias will receive shall be pro-rata in accordance with the percentage of shares that St. Elias owns of Hi Ho on the date that the proceeds of the option or sale are received by Hi Ho; and

(e)   following any distribution as set out above, Hi Ho shall have the right to purchase 1,750,000 of the said 3,500,000 shares from St. Elias at an exercise price of $1.00 per share for a period of 10 years.